News and views about legal academia and the legal profession by Brian Leiter (University of Chicago) and Dan Filler (Drexel University)

July 31, 2017

Focus group of California lawyers defends tight restrictions on entry into the legal profession (Michael Simkovic)

California is an extreme outlier in the extent to which it restricts entry into the legal profession compared to other U.S. jurisdictions. Two examples of this include an unusually high minimum cut score on the bar exam and a refusal without exception to permit experienced licensed attorneys from other jurisdictions to be admitted without re-examination.

California lawyers are relatively highly paid, and relatively few in number considering the size of the workforce in California. Restrictions on entry into the profession may help maintain this status quo. There are serious questions about whether this protects consumers, or is economic protectionism. Economic protectionism could benefit California lawyers, but it would likely also harm consumers of legal services by making legal services less available, more expensive and perhaps lower in quality because of reduced competition. Protectionism would also reduce economic opportunity for those denied the option of practicing law in California, much as immigration restrictions deny economic opportunity to those excluded from high-income countries.

The Supreme Court of California, concerned about the anti-trust implications of a licensed profession establishing criteria for entry, instructed the California State Bar to prepare recommendations on revising the California bar cut score.

Stephen Diamond reports that the California State Bar recommended that its bar examination should either stay the same or be made even harder.

The California Bar arrived at this conclusion by asking a panel of California lawyers how hard the bar exam should be. To be more specific, panelists read essays, categorized them into good, medium and bad piles, and, with the assistance of a psychologist who specializes in standardized testing, used this categorization to back-out an extremely high recommended bar passage score.

Finding that people with high multiple choice scores also tend to write better essays is about as surprising as finding that cars that Consumer Reports rates highly are also often highly rated by J.D. Power. It's also about as relevant to the policy decision facing the California Supreme Court about minimum competence to practice law.

The relevant question for restricting entry into the legal profession is not whether good (and presumably expensive) lawyers are better than mediocre (and presumably more affordable) lawyers. Rather, the relevant question is when consumers should be able to decide for themselves whether to spend more for higher quality services or to save money and accept services of lower quality. Most people will agree that a new Lexus is likely a better, more reliable and safer car than a similar-sized used Toyota. But this difference in quality does not mean that the government should banish used Toyotas from the roads and permit to drive only those who are willing and able to buy a new Lexus.

Is there evidence that a bar examinee who would be permitted to practice law in Washington D.C. or New York or Boston or Chicago, but not in California, would routinely make such a mess of clients' affairs that California clients should not even have the option to hire such a lawyer?

Is there evidence that consumers of legal services cannot tell the difference between a good lawyer and a dangerously bad one?

If these problems exist, could they be addressed by simply requiring lawyers to disclose information to prospective clients that would enable those clients to judge lawyer quality for themselves?

The California Bar has not yet seriously addressed these questions in arriving at its recommendations.

The California Bar also reported that other states have sometimes recommended increases or decreases to their own bar examination cut score. But these states are almost all starting with much lower bar cut scores than California's baseline. It appears that few if any other states recommended bar examination cut scores as high as California's.

Lateral hires with tenure or on tenure-track, 2016-17

MOVING TO FRONT FOR THE LAST TIME--ORIGINALLY POSTED AUGUST 1, 2016

These are non-clinical appointments that will take effect in 2017 (except where noted); I will move the list to the front at various intervals as new additions come in. (Recent additions are in bold.) Last year's list is here.

*Aviva Abramovsky (commercial law, insurance law, financial regulation, legal ethics) from Syracuse University to the University at Buffalo (to become Dean).

*Ifeoma Ajunwa (privacy, health law & policy, antidiscrimination law) from the University of District Columbia Clarke School of Law to Cornell University Industrial and Labor Relations (with a courtesy appointment in law as well) (untenured lateral).

*Richard Albert (constitutional law, comparative constitutional law) from Boston College to the University of Texas, Austin (effective January 2018).

*Erez Aloni (family law, contracts, law & sexuality) from Whittier Law School to Allard School of Law at the University of British Columbia (untenured lateral).

July 24, 2017

How unemployment at graduation affects lawyer earnings over time

We investigate whether economic conditions at labor market entry predict long-term differences in law graduate earnings. We find that unemployment levels at graduation continue to predict law earnings premiums within 4 years after graduation for earners at the high end and middle of the distribution. However, the relation fades as law graduates gain experience and the difference in lifetime earnings is moderate. This suggests that earnings figures from After the JD II and III -- which track law graduates who passed the bar exam in 2000 -- are likely generalizable to other law cohorts because these studies are outside the window when graduation conditions predict differences in subsequent earnings.

Outcomes data available prior to matriculation do not predict unemployment or starting salaries at graduation. Earnings premiums are not predicted by BLS projected job openings.

While changes in cohort size predict changes in the percent of law graduates practicing law, we find little evidence that changes in cohort size predict changes in earnings. This suggests that law graduates who switch to other occupations when law cohort sizes increase are not hurt financially by larger cohorts.

For medium to high earning graduates, successfully timing law school predicts a higher value of a law degree ex-post, but simulations show that no strategy for ex-ante timing is readily available.

June LSAT takers up nearly 20% last month compared to 2016

Occupational licensing regimes can help markets function when those markets suffer from what Economist George Akerlof coined a “lemons” problem. In a lemons market, it is too costly or difficult for consumers to distinguish goods or services of acceptable quality from those that are close to worthless or even harmful. Licensing regimes can help solve this problem by assuring consumers of a minimal baseline level of quality. Effectively, licensing removes the bottom of the market, increasing quality, consumer confidence, volume, and price.

But economists worry that licensing regimes could be abused. For example, if members of a licensed occupation were to seize control of licensing, they might set unnecessarily high barriers to entry for their industry, above what is optimal for consumer protection. This could create an artificial shortage, reduce competition, drive up prices and drive down quality of services. Political leaders also worry that excessive state or local licensing regimes could deprive workers of valuable economic opportunities and reduce their geographic mobility.

These leaders of legal education note that California has a higher cut score than any state except Delaware, no justification has been provided for this unusually high cut score, and some parts of California may have a shortage of lawyers. Moreover, although law graduates from California score better on the MBE than the national average, they are less likely to pass the bar exam because of California’s unusually high cut score. The case for bringing California’s cut score into line with those of other leading legal jurisdictions such as New York has been most forcefully stated by UC-Hastings Dean David Faigman.

Amid concerns about possible anti-trust lawsuits against the State Bar, the Supreme Court of California has agreed to supervise the state bar of California and may set a lower bar cut score.

High cut scores are not the only signs of possible anti-competitive protectionism in California. California is among the few states that, without exception, forces experienced attorneys licensed in other states to sit for reexamination prior to relicensing. The overwhelming majority of jurisdictions—including New York, Washington D.C., Illinois, Texas, and Massachusetts—permit experienced lawyers who are licensed in another state to obtain a license to practice law on motion, without the need for reexamination. (Some impose additional requirements, such as graduation from an ABA-approved law school or reciprocity by the state of origin).

Data from the U.S. Bureau of Labor Statistics, Occupational Employment Statistics[i] shows that California lawyers earn more, on average, than lawyers in any jurisdiction except Washington D.C.

While this may be great for lawyers, it is not necessarily an unmitigated good. It means that legal services likely cost clients more and may be less widely available.

This could be for benign reasons, for example, because California lawyers provide a higher quality of service, or are concentrated in highly profitable areas of practice. For example, the technology sector might create demand in sophisticated niche practice areas such as patents.

On the other hand, high average wages could be a sign of barriers to entry and protectionism which restrict access to legal services. For example, in most states, lawyers are an integral part of residential real estate closings and help advise clients on how to mitigate risks. However, in California real estate closings are handled almost exclusively by non-lawyer real estate agents. Real estate agents are compensated only when deals close, and have little incentive to raise red flags for buyers—and indeed, may lack the training to fully understand the risks. Whereas real estate prices in New York and Boston are relatively steady, in Los Angeles and San Francisco, they are about as volatile as the stock market.

Outside of California, high wage-jurisdictions with sophisticated legal practices, such as New York and Washington D.C., attract a relatively large number of lawyers, as measured by the share of the workforce employed as lawyers and a BLS measure, the location quotient.ii

However, California has a substantially lower concentration of lawyers than these leading jurisdictions, and also trails jurisdictions like Illinois and Florida. This pattern—persistently high prices of legal services and persistently low relative quantity of lawyers—is consistent with high barriers to entry.[iii]

These data are suggestive, and not conclusive. However, in combination with seemingly protectionist institutional features, they raise serious questions about California’s unusually strict requirements for entry into the legal profession.

Some have attempted to impugn the motives of law school deans, especially those who lead law schools with low bar passage rates. But critics of the California bar exam cut score include the deans of Stanford, USC, Berkeley, UCLA, and UC-Irvine, whose graduates overwhelmingly pass the California bar examination on the first try. (see also here).

The strongest substantive defense of a high bar cut-score may come from studies of the Connecticut Bar by Peter Siegelman and colleagues, which found that academic credentials and bar examination performance help predict subsequent discipline of attorneys (here and here).

But Siegelman and colleagues found that the baseline rate of discipline was so low to begin with that excluding more individuals from the legal profession would provide very limited benefits to clients. They noted that lawyers at greater risk of passing the bar exam might have greater rates of discipline because they are more likely to work in small or solo practices where discipline is more common.

[ii] The location quotient is the ratio of the area concentration of occupational employment to the national average concentration. A location quotient greater than one indicates the occupation has a higher share of employment than average, and a location quotient less than one indicates the occupation is less prevalent in the area than average.

[iii] Legal education is notably not a barrier to entry in California, which permits graduates of non-ABA approved law schools or college graduates who have apprenticed with a lawyer but have not completed law school to sit for the bar examination.

UPDATE: July 26, 2017. Derek Muller and Rob Anderson posted a working paper to SSRN that sought to replicate much of Siegelman & colleague's analysis using California data. Compared to Connecticut California makes less granular data available to researchers, and so Muller and Anderson relied on law school attended as a proxy for bar exam performance. Although the California results are similar--relatively few lawyers are disciplined in any given year--Muller and Anderson argue that the probability of being disciplined at least once over the course of a 40 year career might still be reasonably high for some lawyers. This raises the question of whether clients would materially suffer from being served by a lawyer who was disciplined once many years ago or might be disciplined once in the distant future, as opposed to one who was recently in trouble with the bar.

July 7, 2017

In Memoriam: Norman Dorsen (1930-2017) and John A. Robertson (1943-2017)

My former Texas colleague John Dzienkowski kindly called to my attention the recent passing of two well-known figures in the legal academy.

Professor Dorsen was a leading civil liberties advocate and longtime member of the NYU Law faculty. The New York Times obituary is here.

I was particularly saddened to learn of the death of my former Texas colleague John A. Robertson, a leading figure in law and bioethics. The Austin-American Statesman obituary is here, and there is a lovely remembrance from Glenn Cohen (Harvard) here.